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RURAL BANK OF CALOOCAN VS CA, G.R NO. 32116 APRIL 21,1981

DBP VS MIRANG
FACTS:
In Development Bank of the Philippines v. Zaragoza, [31] Development Bank of the
Philippines v. Mirang, [32] andDevelopment Bank of the Philippines v. Jimenez, et al., On December 7,1959 respondent Maxima Castro together with Severino Valencia they went to the rural bank of
[33] the Court held that when the bank resorted to Act No. 3135 in order to sell the Caloocan to apply for an industrial loan in the amount of P3,000.00each of them and mortgaged the house and
mortgaged property extrajudicially, it did so merely to find a proceeding for the sale. In its lot of Mrs Castro and also they executed a promissory note in favor of the bank. On February 13,1961 the subject
10 October 2006 petition, DBP claims that when it resorted to Act No. 3135 in order to
property was a subject of sheriff sale but was postponed due to the request of Castro and Valencia with the
sell the mortgaged property extrajudicially, it did so merely to find a proceeding for the
sale. DBP stated that: [W]hen herein petitioner resorted to Act 3135 in its application for consent of the bank and was scheduled on April 10,1961 which was a special holiday but the auction continued
extrajudicial foreclosure of the subject mortgaged real estate, it did so only to find a in the amount of P6,000.00 prompting Mrs Castro to file a case against the bank for the recovery of her property .
proceeding for the extrajudicial sale. The Court of Appeals should have noted that neither
Republic Act No. 85 (the Charter of the Rehabilitation Finance Corporation) nor Act 1508 ISSUE:
(Chattel Mortgage Law) prescribe a procedure for extrajudicial foreclosure of real estate
mortgage as provided under Act 3135. Such action, therefore, cannot be construed to Whether or not the promissory note executed by Mrs Castro is valid or not?
mean a waiver of petitioner's right to demand the payment of respondents' entire
obligation as the proper redemption price. There is no such waiver on the part of the HELD:
petitioner. [I]t is hereby stressed that DBP did not elect Act 3135 to the exclusion of other
laws in the extrajudicial foreclosure of the subject mortgaged real property. Such a Supreme court declare the promissory note valid between the bank and Castro and the mortgage contract
conclusion is definitely contrary to law and jurisprudence, which settled the rule that Act binding on Castro beyond the amount of P3,000.00 for while contracts may not be in may not be invalidated
3135 is the general law that governs the procedure and requirements in extra-judicial insofar as they affect the bank and Castro on the ground of fraud because the bank was not a participant thereto
foreclosure of real estate mortgage, but in determining the redemption price of the such may however be invalidated on the ground of substantial mistake mutually committed bt them as a
property mortgaged to the Development Bank of the Philippines, the DBP Charter shall
consequence of the fraud and misrepresentation inflicted by the Valencias. Wherefore finding no irreversible error
prevail. It is of judicial notice that Act 3135 is the only law governing the proceedings in
extrajudicial foreclosure of real estate mortgage. Act No. 1508, on the other hand, in the judgment under review, we affirmed the same in toto.
governs the extrajudicial foreclosure of chattel mortgage, and should not be in issue in
the instant case which involves a real estate mortgage. It should likewise be of judicial ----------------------------------------------------------------------------------------------------------------------
notice that Republic Act No. 85 is the charter of the Rehabilitation Finance Corporation,
predecessor of appellant DBP. RA 85 prescribes the redemption price, not the Tan chat vs c. n. hodger 98Phil928
proceedings and requirements in an extrajudicial foreclosure of real estate mortgage
such as those found in Act 3135. x x x When appellant DBP cited Act 3135 in its Deed of Lim vs ca
Real Estate Mortgage or even in the application for foreclosure of mortgage, it was not a
matter of making an exclusive option or choice because Act 3135 governs the procedure
and requirements for an extrajudicial foreclosure or real estate mortgage. In citing said
law, Appellant DBP was merely finding a proceeding for extra-judicial foreclosure sale x x
x. And while the said Act 3135 provides for redemption, such provision will not apply in
the determination of the redemption price on [sic] mortgages to DBP. In the latter case,
the DBP Charter will prevail.[34] Even assuming that DBP chose Act No. 3135 as the
governing law for the extrajudicial foreclosure, the redemption price would still be
equvalent to the remaining balance of the loan. EO No. 81, being a special and
subsequent law, amended Act No. 3135 insofar as the as redemption price is concerned.
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